## Proposal to Provide Essential Air Service

at El Dorado/Camden, Arkansas
Harrison, Arkansas
Hot Springs, Arkansas

Docket DOT

- OST

- 1997

- 2935
May 16, 2013

Direct Inquiries Regarding this Proposal to:

Shane Storz, CEO

Air Choice One Airlines

12300 Old Tesson Road, Suite 200 F, Saint Louis, MO 63128

Phone: (866) 435

- 9847 Fax : (314) 843

- 8527 E

- mail: shane@airchoiceone.com



# Multi

- Aero Inc. d/b/a

Air Choice One

# Our Commitment

05/16/2013 

### Air Choice One is aware of the many challenges facing the Harrison, Hot Springs, and El Dorado

, Arkansas, communities. This proposal will give the best access to the national transportation system for the communities at reasonable prices. We understand the efforts of a dedicated air carrier are critical to having scheduled

airline service in the future. We have proven our strategy works in the neighboring community of Jonesboro,

Arkansas and with our other EAS communities. We are committed to delivering these same dramatic increases in enplanements and sustaining these numbers over time.

As a provision for the lack of TSA out of your airports , our non

- sterile service will include dedicated shuttle van services at Lambert St. Louis International Airport and Memphis International Airport. Our private shuttle van will increase the ease of travel for our passengers and simplify the process of connecting to other carriers.

Additionally, this proposal allocates substantial resources to support marketing efforts. Achievements in our other EAS markets demonstrate that our marketing strategies are successful. Through on

- site community outreach, community

- specific advertising, consistent flight schedules, and outstanding customer service we will build consumer recognition in the community and drive passengers back to your airport.

We commit to providing you with outstanding service . We will continue working with you throughout our term to provide the next level of air service that will bring us all success

.

# Our Fleet

Cessna Grand Caravan

05/16/2013

Exceptional Cargo Space Well

- Appointed Cabin

Proven Reliability

# Market Growth Strategy

– Marketing

Investment

05/16/2013 

### Air Choice One reinvests in our served communities and will grow ridership

• TRADITIONAL MEDIA

• Radio

- Talk Shows/Commercials

• TV Commercials and Event Coverage

• Print

- Newspaper/Magazines

• Billboards

• Web Based

– E

- Blasts

– Monthly E

- Mail Promotions

– City Representation on Our Website

• SOCIAL MEDIA

• Twitter, Facebook, Linked In

• INTERACTIVE MEDIA



### • Contests

• You Tube/Videos

• EVENTS AND SPONSORSHIPS

• Local Charitable Support

- March of Dimes, Make

- A

- Wish Foundation, Red Cross, etc.

• Business/Community Support

- Golf Tournaments, Business Luncheons, Air Shows, etc.

• LOCAL TICKET OFFICE

# Marketing Growth Strategy

– New Hub, New Opportunities

05/16/2013 

## ST. LOUIS’ COMBO OF LOW FARE CARRIERS AND ENDLESS CONNECTIONS AR E THE

KEY TO 

# SELLING MORE TICKETS AND GROWING RIDERSHIP!

• 234 Daily Departures to 64

Domestic & International

Markets

• Over 24,000 Daily Outbound

Seats St. Louis

Connects You

to the World!

Source: St. Louis International Airport

# Marketing Growth Strategy

– New Hub, New Opportunities

05/16/2013 Source: St. Louis International Airport/ Diio schedule file 2.0 4.0 6.0 8.0 10.0 12.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007 2008 2009 2010 2011 2012 2013 Seats in Millions (Year ending)



## BNA MCI MEM STL STL air service is growing while

MEM continues

to decline

This is a trend

we see continuing with STL ultimately being the predominant airport in the

mid

- west

# Marketing Growth Strategy

– New Hub, New Opportunities

05/16/2013 Source: St. Louis International Airport/T100 non

- directional average 

### Jonesboro

passenger count increased significantly

with move to

STL

The same can

be true of HRO Airline HUB Destination 3 rd 

### Quarter Passengers

2011 2012 Change

3E STL JBR Jonesboro, AR 1,441 1,441

K5 MEM ELD El Dorado, AR 382 195 (187)

HOT Hot Springs, AR 260 187 (74)

HRO Harrison, AR 821 840 20

JBR Jonesboro, AR 313 (313)

Total 1,776 2,663 887



## • We are Offering Harrison Two Hubs to Better Serve the Community

• Dual Hubs Increase Connectivity

• Increased Passenger Options Grow Ridership

• Air Choice One Will Increase Capacity Through Additional Unsubsidized Flight Segments


## Should Passenger Usage Warrant

• Flight Patterns of the Current Carrier Make it Impossible to Determine Actual Passenger Loads Originating/Ending in Harrison verses Pass

- Thru Traffic

# Jonesboro: A Success Story

05/16/2013 944 910 925

667 664 928

79 97 100

23 249 691 692 877 863 1,082 1,030

769

0 200 400 600 800 1,000 1,200

OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP Passenggers O & D

Month 

## JONESBORO, AR

- PASSENGER ORIGIN & DESTINATION

DOT FY 2012-2013

DOT FY 2011-2012



### Previous Airline

# Meeting DOT Challenges

05/16/2013 

### • Order Re

- Selecting Carrier for Burlington, IA, & Decatur, IL (December 22, 2011)

– DOT Challenge

• “This selection may be extended an additional three years at both communities, if Air Choice One
fully implements an electronic ticketing and baggage agreement with a major airline with a hub
operation at Chicago O’Hare and/or St. Louis, by January 31, 2013 .” (Source: www.regulations.gov

Order: 2011

- 12

- 17 Served : December 22, 2011 DOT

- OST

- 2001

- 8731 & DOT

- OST

- 2006

- 23929)



### • Order Extending Service Period for Burlington, IA, & Decatur, IL (December 31, 2012)

– DOT Decision

• “ Since Air Choice One fully implemented its distribution capabilities in advance of the January 31,

2013 , date as described in Order 2011

- 12

- 17, we will extend Air Choice One’s service period by three


### years, from February 1, 2013, through January 31, 2016.” (Source: www.regulations.gov Order 2012

- 12

- 23 Served: December 31, 2012 DOT

- OST

- 2001

- 8731 & DOT

- OST

- 2006

- 23929)



### • Order Extending Service Period for Jonesboro, AR (February 25, 2013)

– DOT Decision

• “Because Jonesboro’s continued eligibility was in flux at the time of the carrier

- selection Order in
December 2011, and because Air Choice One and the community have significantly increased
passenger usage since the carrier inaugurated service , we will extend Air Choice One’s service period for an additional 12 months, through February 28, 2014.” (Source: www.regulations.gov Order: 2013

- 2

- 24 Served: February 25, 2013 Docket DOT

- OST

- 1997

- 2935)

# Options Index

– Standalone Service
Harrison, Arkansas

05/16/2013 

### OPTION 3

, 2 YEAR SERVICE WITH OPTIONAL DISCOUNT FOR 4 YEAR TERM

– MEM SERVICE

Harrison, Arkansas

– Memphis International

Cessna Grand Caravan 18 Round Trips Per Week OPTION 1, 2 YEAR SERVICE WITH OPTIONAL DISCOUNT FOR 4 YEAR TERM

DUAL HUBS

– MEM & STL SERVICE

Harrison, Arkansas

– Memphis International & St. Louis Lambert International

Cessna Grand Caravan 10 RT/MEM + 8 RT/STL = 18 Round Trips Per Week

OPTION 2

, 2 YEAR SERVICE WITH OPTIONAL DISCOUNT FOR 4 YEAR TERM

– STL SERVICE

Harrison, Arkansas

– St. Louis Lambert International

Cessna Grand Caravan 18 Round Trips Per Week

## Harrison, Arkansas

– Dual Hubs

Option 1: 2 Year Standalone Service With Discount For 4 Year Term



## 18 Total Round Trips Per Week

– Based on 98% Completion Rate

05/16/2013 

### Harrison, Arkansas

– Dual Hubs

– Memphis International & St. Louis Lambert International

– Caravan

Operation Revenues

HRO

- MEM & HRO

- STL Revenues $ 648,600

Other Revenues 6,486

Total Operating Revenues $ 655,086

Direct Operating Expenses

Flying Operations $ 308,235

Fuel and Oil 701,164

Maintenance 580,905

Aircraft Leases 425,000

Total Direct $2,015,304

Marketing & Distribution 143,700

Indirect 650,063

Total Operating Expenses $2,809,067

Operating Loss $2,153,981

Profit Element (5% total Oper. Exp.) 140,454

Compensation Required $2,294,435

Compensation per PAX $244

Compensation per Departure $1,247 # Passengers: 9,400
Average Fare: $69.00

Departures: 1,840

Block Hours: 2,371 Revenue Passenger Miles: 2,006,400

Available Seat Miles: 3,121,198

Departure Arrival

Representative Schedule

– Monday

- Friday

HRO 6:00 AM MEM 7:15 AM

MEM 7:30 AM HRO 8:45 AM

HRO 4:30 PM MEM 5:45 PM

MEM 6:05 PM HRO 7:20 PM

Representative Schedule

– Sunday, Monday,

Thursday, Friday

HRO 9:30 AM STL 10:50 AM

STL 12:00 PM HRO 1:20 PM

STL 2:00 PM HRO 3:20 PM

HRO 2:15 PM STL 3:35 PM

DISCOUNTED SUBSIDY $ 2,271,491/Year $1,235/Departure DISCOUNT FOR 4

- YEAR TERM

## Harrison, Arkansas

– St. Louis Lambert International

Option 2: 2 Year Standalone Service With Discount For 4 Year Term



## 18 Total Round Trips Per Week

– Based on 98% Completion Rate

05/16/2013 

## Harrison, Arkansas

– St. Louis Lambert International

– Caravan

Operation Revenues

HRO

- STL Revenues $ 726,800

Other Revenues 7,268

Total Operating Revenues $ 734,068

Direct Operating Expenses

Flying Operations $ 334,807

Fuel and Oil 754,282

Maintenance 643,860

Aircraft Leases 425,000

Total Direct $2,157,949

Marketing & Distribution 208,539

Indirect 462,062

Total Operating Expenses $2,828,550

Operating Loss $2,094,482

Profit Element (5% total Oper. Exp.) 141,428

Compensation Required $2,235,910

Compensation per PAX $243

Compensation per Departure $1,215 # Passengers: 9,200
Average Fare: $79.00

Departures: 1,840

Block Hours: 2,575 Revenue Passenger Miles: 2,125,200

Available Seat Miles: 3,390,267

Representative Schedule

Departure Arrival

HRO 6:00 AM STL 7:20 AM

STL 7:45 AM HRO 9:05 AM

HRO 10:00 AM STL 11:20 AM

STL 12:00 PM HRO 1:20 PM

HRO 4:30 PM STL 5:50 PM

STL 6:05 PM HRO 7:25 PM

DISCOUNTED SUBSIDY $ 2,213,551/Year $1,203/Departure DISCOUNT FOR 4

- YEAR TERM

## Harrison, Arkansas

– Memphis International

Option 3: 2 Year Standalone Service With Discount For 4 Year Term



## 18 Total Round Trips Per Week

– Based on 98% Completion Rate

05/16/2013 

## Harrison, Arkansas

– Memphis International

– Caravan

Operation Revenues

HRO

- MEM Revenues $ 621,000

Other Revenues 6,210

Total Operating Revenues $ 627,210

Direct Operating Expenses

Flying Operations $ 286,978

Fuel and Oil 658,668

Maintenance 551,880

Aircraft Leases 425,000

Total Direct $1,922,526

Marketing & Distribution 144,258

Indirect 523,027

Total Operating Expenses $2,589,811

Operating Loss $1,962,601

Profit Element (5% total Oper. Exp.) 129,491

Compensation Required $2,092,092

Compensation per PAX $232

Compensation per Departure $1,137 # Passengers: 9,000
Average Fare: $69.00

Departures: 1,840

Block Hours: 2,208 Revenue Passenger Miles: 1,782,000

Available Seat Miles: 2,905,943

Representative Schedule

Departure Arrival

HRO 6:00 AM MEM 7:15 AM

MEM 7:30 AM HRO 8:45 AM

HRO 10:00 AM MEM 11:15 AM

MEM 12:00 PM HRO 1:15 PM

HRO 4:30 PM MEM 5:45 PM

MEM 6:05 PM HRO 7:20 PM

DISCOUNTED SUBSIDY $ 2,071,171/Year $1,126/Departure DISCOUNT FOR 4

- YEAR TERM

# Options Index

– Inseparable Service Hot Springs, AR & El Dorado/Camden, AR

05/16/2013 

### OPTION 1, 2 YEAR SERVICE WITH OPTIONAL DISCOUNT FOR 4 YEAR TERM

INSEPARABLE

– MEM SERVICE

Hot Springs, Arkansas & El Dorado/Camden, Arkansas

– Memphis International

Cessna Grand Caravan 18 RT/HOT + 18 RT/ELD Per Week

## Hot Springs & El Dorado/Camden, AR

Option 1: 2 Year Inseparable Service With Discount For 4 Year Term

HOT & ELD

- 18 Total Round Trips Each Per Week

- Based on 98% Completion Rate

05/16/2013 Operation Revenues

HOT

- MEM Revenues $ 454,300

Other Revenues 4,543

Total Operating Revenues $ 458,843

Direct Operating Expenses

Flying Operations $ 263,063

Fuel and Oil 603,780

Maintenance 505,890

Aircraft Leases 425,000

Total Direct $1,797,733

Marketing & Distribution 105,535

Indirect 395,339

Total Operating Expenses $2,298,607

Operating Loss $1,839,764

Profit Element (5% total Oper. Exp.) 114,930

Compensation Required $1,954,694

Compensation per PAX $254

Compensation per Departure $1,062 Operation Revenues

ELD

- MEM Revenues $ 424,800

Other Revenues 4,248

Total Operating Revenues $ 429,048

Direct Operating Expenses

Flying Operations $ 319,355

Fuel and Oil 668,078

Maintenance 581,681

Aircraft Leases 425,000

Total Direct $1,994,114

Marketing & Distribution 98,683

Indirect 395,339

Total Operating Expenses $2,488,136

Operating Loss $2,059,088

Profit Element (5% total Oper. Exp.) 124,407

Compensation Required $2,183,495

Compensation per PAX $303

Compensation per Departure $ 1,187 

### Inseparable Service

– Hot Springs, AR & El Dorado/Camden, AR

– Memphis International

– Cessna Caravan

Total Subsidy Required for HOT & ELD Inseparable 2 Year Service: $4,138,189 (Discounted for 4 Year Term: $4,096,807)

## Hot Springs & El Dorado/Camden, AR

Option 1: 2 Year Inseparable Service

HOT & ELD

- 18 Total Round Trips Each Per Week

- Based on 98% Completion Rate

05/16/2013 EL DORADO, AR

Representative Schedule

Departure Arrival

ELD 6:00 AM MEM 7:15 AM

MEM 8:45 AM ELD 10:00 AM

ELD 11:30 AM MEM 12:45 PM

MEM 1:30 PM ELD 2:45 PM

ELD 4:30 PM MEM 5:45 PM

MEM 6:30 PM ELD 7:45 PM HOT SPRINGS, AR

Representative Schedule

Departure Arrival

HOT 6:30 AM MEM 7:40 AM

MEM 8:20 AM HOT 9:30 AM

HOT 11:00 AM MEM 12:10 PM

MEM 1:00 PM HOT 2:10 PM

HOT 4:00 PM MEM 5:10 PM

MEM 6:00 PM HOT 7:10 PM # Passengers: 7,700
Average Fare: $59.00

Departures : 1,840

Block Hours: 2,024 Revenue Passenger Miles: 1,524,600

Available Seat Miles: 2,905,943 # Passengers: 7,200
Average Fare: $59.00

Departures : 1,840

Block Hours: 2,281 Revenue Passenger Miles: 1,663,200

Available Seat Miles: 3,390,267 

### Inseparable Service

– Hot Springs, AR & El Dorado/Camden, AR

– Memphis International

– Cessna Caravan

# Air Choice One Has The Keys

To Your Success

05/16/2013 TSA SECURITY PROGRAM